Others should take notice of ‘head tax’

Events in Seattle are re-emphasizing a point about economic development that too many government officials seem to have forgotten: Don’t bite the hand that feeds you.

Officials in that West Coast city have said they plan to establish a new “head tax” on businesses that gross more than $20 million a year in business. Note that the tax would be based on gross transactions, not profits. It could hit some of the 585 targeted businesses hard.

If Seattle proceeds, the companies would be charged a new tax based on the numbers of their employees. City officials hope to rake in $75 million a year. They want to spend it for programs to aid the homeless and to artificially hold down residential rents.

But one firm is fighting back. Amazon, the online marketing giant, has put plans for a new Seattle skyscraper on hold until city officials decide on the tax.

Proponents of the new tax call that extortion. Really?

Amazon employs more than 45,000 workers in Seattle. It and they already pay a substantial portion of city government’s bills. Can company officials be blamed for suggesting that if new taxes are imposed, they may think about moving some operations elsewhere?

No, they cannot be blamed for that. Every dime they pay the city, after all, is a dime they cannot pay workers or use to grow their business. Seattle may pay for biting the hand that feeds it. Other cities and states should take note of that.